America is speeding to a red light....
American shale oil production is down 1.75 MM BOPD from its 2019 highs, yet oil and condensate exports to foreign countries set a record in December of 2020, just three months ago.
Permian unconventional HZ production closed out the year, 2020, at 3.8MM BOPD; new pipeline infrastructure from West Texas and export facilities along the Texas and Louisiana Gulf Coasts that handle Permian LTO implies over 89% of Permian production is exported to foreign countries, friendly folks to the US...like China. 71% of all of Texas' HZ shale oil production now leaves our country, before Americans can use the stuff.
The Permian's base-line annual decline is now 2MM BOPD. What that means is if no new wells were added Y-O-Y, current 3.8MM BOPD of LTO production rates would decline to 1.8MM BOPD. In one year! We have to stay on the drilling hamster wheel, round and round we go, 24/7...to simply export our oil elsewhere.
Are those shale guys making enough money from all this to keep employees, pay dividends, and pay back an estimated $300 billion of public and private debt? Can they drill new wells and replace reserves from net revenue, from "free" cash flow?
No. Exporting America's oil still requires credit/debt. Try this: https://www.ft.com/content/03173caa-2622-4e68-bbaf-b6e56d856042 The new source of credit is now...junk bonds.
Still not pissed? Try this: https://www.ft.com/content/667cd344-a222-4002-9e2a-dce13d669d33
To be able to export the last of America' remaining oil resources to foreign countries, flaring in the Permian Basin is soaring once again. The shale sector is wasting associated gas again at pre-pandemic, 2019 levels.
No? You must not have kids. Or, you make $ 250K a year as a frac consultant. So, how about this:
All of West Texas, including the Permian Basin, is in a severe drought. How much money has been spent the past three years on recycling produced, or flow back water, to be used again as a source for new frac water? How about little to zilch. 235-250 wells are being completed every month in West Texas requiring 6,000,000,000, as in billion, gallons of water. Each month. Most of that water is good for something, either humans or livestock; some of it is good for growing food.
Look at the decline rate on all of America's shale oil production in 2019...before COVID, when the shale oil industry was still blowing and going. This decline is getting worse every year. 2019, for instance; that's a cliff, not a slope. Same in the first 4 months of 2020, before DUC season opened. Hyperbolic, 25 year declines my ass.
And paalease don't tell me you have bought into the horse dookey shale oil cheerleaders are telling us, again, about technology saving the day and well productivity in the Permian Basin getting better. It ain't happening. Its getting worse.
How is any of this helping America's long term hydrocarbon security? Is this stupid stuff ensuring our children a long term source of affordable oil? What's good about flaring, or draining valuable groundwater in West Texas, all on borrowed money, on credit...just to export the last of America's oil to foreign countries?
Nothing. If you think so you flat-ass need to have your head examined.